Double-up on insurance policy leads to $9,056 settlement

A couple complained to the Insurance and Financial Services Ombudsman after they realised they had been paying for an insurance policy which they believed to have been cancelled. 

The couple had taken out a life insurance policy many years ago. When they wanted to purchase a new house they had to arrange for a new policy.  

However, the couple unknowingly continued to pay premiums on the old policy. They had paid $18,000 on the old policy before realising it had not been cancelled. 

When the couple requested a refund from the insurer, the insurer declined on the basis that there was nothing to make it aware that the old policy should have been cancelled. Additionally, the couple had regularly been sent annual statements showing their contributions to the old policy. 

The couple then made a complaint to the Insurance and Financial Services Ombudsman. 

The couple told the Ombudsman that they did not remember whether they signed a cancellation form as they were given multiple forms from the bank at the time of their house purchase. 

The Ombudsman found that the bank, acting as the insurer’s agent, failed to ensure the old policy was cancelled. The Ombudsman stated that the bank may have breached its duty of care to the couple especially since the bank and the insurer knew of the existence of the old policy. 

This failure had to be balanced by the fact that the couple were sent annual statements of their contributions to the old policy for many years. 

The parties therefore agreed for the bank and the insurer to refund the couple $9,056, being half of the contributions to the old policy.

The facts in this situation are a strong reminder of the sense of carefully reviewing that things you assume have been done actually have, and carefully reviewing all notices sent to you to ensure they reflect what you intend to be happening, and paying for! 

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